Open AccessOn the Link between House Prices and House Permits: Asymmetric Evidence from 51 States of the United States of America
Author(s) -
Mohsen BahmaniOskooee,
Hesam Ghodsi,
Muris Hadzic
Publication year - 2021
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100324
Subject(s) - house price , economics , supply and demand , state (computer science) , demand shock , test (biology) , monetary economics , econometrics , microeconomics , paleontology , algorithm , computer science , biology
Increased issuance of housing permits is said to move house prices in eitherdirection. If perceived as an indication of a growing housing supply, house prices areexpected to decline (supply hypothesis). However, a larger number of housing permits canalso reflect positive expectations about future housing demand which would drive houseprices upwards (demand hypothesis). We test these two competing hypotheses by using datafrom each state in the United States. We estimate linear and non-linear models to testif housing permit issuance determines house prices. The results show support for boththe supply and demand hypotheses in the short run for most states but only for thedemand hypothesis in the long run. We also uncover asymmetric short run and long-runeffects in 21 states